Scott Beck, CEO of United Texas Bank, asked the members of the working group on technology Blockchain of the state to recommend a policy to leave stablecoins in the hands of banks and not in the hands of cryptocurrency companies.
Speaking before the Texas Work Group on Blockchain Matters in Austin on Friday, Beck suggested limiting the issuance of US dollar-backed stablecoins to licensed banks rather than issuers like Circle. The CEO of United Texas Bank cited a November report from the President’s Task Force on Financial Markets, in which the group said stablecoin issuers should meet the same standards as insured depository institutions, including state and federal banks.
“If those stablecoins are defined as ‘money,’ banks are the right economic actor to issue and manage them,” Beck said. “Banks have the expertise and legal framework to handle money, and unlike current stablecoin players, banks are highly regulated at both the state and federal levels.”
He further added:
“Bringing stablecoin activities into the banking sector and prohibiting non-banks from issuing stablecoins will improve consumer protection and attract more resources and capital to this emerging sector of economic activity.”
Responding to questions from MoneyGram task force member and general counsel Robert Villaseñor, Beck asserted that stablecoin issuers like Circle held assets in “other institutions” as opposed to banks, “effectively absorbing industry deposits.” banking”. He added that some stablecoins were particularly vulnerable to bank runs, potentially threatening the economy if the market reached a certain size, and that leaving issuance to banks ensured compliance with Know Your Customer rules.
Lee Bracher, president of the Texas Blockchain Council and present at the hearing, questioned Beck’s proposal as “anti-competitive.” The CEO of the bank argued that one of the main differences between licensed banks and private companies that issue stablecoins is that, in the case of the former, the money behind the tokens would remain “stored at the Fed”, which also guarantees that the funds would be insured by the FDIC.
The Circle stablecoin, which is pegged to the dollar, is reportedly backed 100% by money or cash equivalents, including bank deposits, Treasury notes, or commercial paper. The stablecoin issuer announced in March that the financial institution BNY Mellon would take care of its USDC reserves; At press time, there were more than 52 billion coins in circulation.
The Texas Work Group on Blockchain Matters was officially formed in September 2021 following the passage of House Bill 1576. According to the group’s website, its mission includes crafting a framework “for the expansion of the blockchain industry in Texas and recommending state policies and investments related to blockchain technology.”
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